More territory, more lines, more customers.
WHAT CONSTRAINS GROWTH
Working capital, above everything Warehouse capacity Delivery capacity Credit risk Management of field staff
WHY WORKING CAPITAL BINDS FIRST
Growth requires more stock and more credit, both funded before collection.
WHAT TO CALCULATE BEFORE EXPANDING
The additional cash required, and when it returns.
WHAT TO AVOID
Growing volume faster than you can fund it.
WHY
It is the commonest way profitable distributors fail.
WHAT TO IMPROVE BEFORE EXPANDING
Stock turnover Collection period Cost per delivery Bad debt
WHY
Each releases cash without any additional funding.
WHAT ADDING TERRITORY REQUIRES
Coverage: representatives and delivery
Stock, held locally or delivered further Credit assessment in an unfamiliar area
WHY THAT LAST POINT IS THE RISK
You have no knowledge of customers in a new area.
WHAT TO DO
Start with cash sales or tight limits.
WHAT ADDING LINES REQUIRES
Capital, space and selling effort.
WHAT TO ESTABLISH
That existing lines are performing before adding more.
WHAT SUB-DISTRIBUTION PROVIDES
Reach without your own coverage.
WHAT IT REQUIRES
Managing credit to sub-distributors, who carry larger balances.
WHAT TO MEASURE
Margin after cost to serve Cash cycle Bad debt Stock turnover
WHAT TO PROTECT
The cash cycle, which is what keeps the business alive.
